By Andrew Chia

"History and the numbers say we're due for a giant correction; here's how it's going to unfold..."

Fortune article dated 17th May 2010

You can see the full article here,

http://money.cnn.com/2010/05/17/magazines/fortune/2010.crash.1987.again.fortune/index.htm

Also, author of all-time best-selling personal finance book Rich Dad Poor Dad says in his latest book Conspiracy of the Rich that the recent stock market rally is a "suckers' rally"; the most dangerous type of rally.  Things look great during the rally but the underlying weakness is frightening.  According to him, the problems from the subprime have not gone away at all.

Fortune's article says that the big crash will occur within this year and it is going to be like 1987 all over again.

While crashes are bad for business and the economy, it is good news for investors and financially intelligent people.  Great transfers of wealth occur during market turmoil.  The question is, are you ready when the transfer of wealth occurs?  

If you talk about receiving big bonuses from the stock market, you can do it if you know the answers to the following questions.

1.  What stocks to buy?

2.  At what price to buy?

3.  When to buy?

4.  How much to buy?

5.  What to do after I buy?

Properties and stocks are the two most common ways that people create wealth and achieve financial independence.

If you are anxious to be ready for the next crash, you should quickly learn the answers to the above five questions.  I have an upcoming full-day workshop to help you do just that.  It's on Sunday, 30th May 2010.

For details and to register, just click on this link, http://andrewchia.com/?page_id=1548

Daniel Wong's Note: Seats are limited, so hurry! Book your seat now ;)

As promised in my previous post, I shall reveal the mistakes that the investors of Maika Holding have made.

Take a loan to buy shares
 As the stock market is a volatile investment vehicle, one should not take a loan to buy shares. One cannot be certain if the return on investment (ROI) will be profitable enough to cover the loan interest in the short term. If the ROI is low or not high enough to cover the loan interest, one could easily make a lost.

Confidence in Government-linked companies (GLC)
This is one of the myth that uninformed new investors are led to believe. In the past decades, history has shown that not all GLCs are well-managed and performed well financially. Some even have negative ROE! You may ask, "Aren't GLCs stable companies and won't go bankrupt because they are backed-up by the government?" It may be true that GLCs won't go bankrupt but one must always remember this fundamental investment principle: Share price movement is always fundamentally tied to the company's earnings. As there are better companies with better financial performance out there, why invest in a losing company (even though it's a GLC)?

Hop into the train too early
Many unwary investors lost money when they buy into IPOs or new investment scheme. To reduce the risk of losing money, it's wiser to wait for the company to mature for at least 10 years before deciding to hop into the 'train' or not. As there are many 'trains' with at least 10 years proven track record, why hop into the 'new train' with lots of uncertainty?

By ROSHAN THIRAN
(Source: http://biz.thestar.com.my/news/story.asp?file=/2010/5/15/business/6255605&sec=business)

“Employ your time in improving yourself by other men's writings, so that you shall gain easily what others have laboured hard for.” - Socrates

A few years ago, while at Lawas in Sarawak, I was told this story of a very strong and skilled Kayan woodcutter who asked for a job with a timber merchant.

He got the job with a good salary and decent work conditions. And so, the woodcutter was determined to do his best for the boss. His boss gave him an axe and on his first day, the woodcutter cut down 15 trees. The boss was pleased and said: “Well done, good work!”

Highly motivated, the woodcutter tried harder the next day, but could only fell 13 trees. The third day, he tried even harder, but only 11 trees were chopped down.

Day after day, he tried harder but he cut down fewer trees. “I must be losing my strength,” the Kayan woodcutter thought. He apologised to the boss, claiming he could not understand why.

Great leaders like Steve Jobs, Mahatma Gandhi and Nelson Mandela have a continuous appetite for learning and growth.

“When was the last time you sharpened your axe?” the boss asked. “Sharpen? I had no time to sharpen my axe. I have been too busy cutting down trees,” said the woodcutter.

He sharpened his axe and immediately was back to 15 trees a day. Since then, he begins the day by sharpening his axe.

Most leaders are too busy doing and trying to achieve, that they never take time to learn and grow. Most of us don't have the time or patience to update skills, knowledge, and beliefs about an industry, or to take time to think and reflect. Many assume that learning ends at school and so sharpening our axe is not a priority.

So, what exactly is sharpening the axe? Dr Steven Covey, who popularised the term, believes it means “increasing your personal production capacity by daily self care and self-maintenance.”

Most people fail to understand what it means and mistake it for taking a break or vacation. If you're overworking yourself and your productivity drops off, take a break.

However, that isn't sharpening the axe; that's putting the axe down. When you put down a dull blade and rest, the blade will still be dull when you pick it up.

The woodcutter does need downtime to rest, but it is not “sharpening the axe.” The woodcutter only becomes more productive by sharpening his blade, analysing new woodcutting techniques, exercising to become stronger, and learning from other woodcutters.

Sharpening the axe is an activity. You too can sharpen the axe of your life. Here are 10 ways:

● Read a book every day;

● Get out of your comfort zone by changing jobs. A new job forces you to learn;

● Have a deep conversation with someone you find interesting. Sharpen your axe through that interaction;

● Pick up a new hobby. Stretch yourself physically, mentally or emotionally;

● Study something new;

● Overcome a specific fear you have or quit a bad habit;

● Have a daily exercise routine or take part in some competition;

● Identify your blind spots. Understand, acknowledge, and address it;

● Ask for feedback and get a mentor; and

● Learn from people who inspire you. Subscribe to YouTube/leaderonomicsmedia and watch interviews of great leaders.

You have to do it as often as possible. But if you're so focused on your task at hand with no time for discussion, introspection, or study, you're not really moving forward. Just as a car needs to be refuelled to keep going, we too need refuelling through learning.

The Management Mythbuster author David Axson believes most organisations still rely on outdated management strategies. Unless we are sharpening our axe daily by observing the changing world and changing ourselves accordingly, we risk becoming irrelevant.

Andrew Grove reinvented Intel and oversaw a 4,500 times increase in market capitalisation by his daily habitual “axe-sharpening” ritual of understanding global changes and taking advantage of these to ensure Intel remained relevant.

Employees at Japanese organisations like Toyota believe it's a crisis if they do not create improvement each day. The “Kaizen mindset” means that every day, whether you're a line worker or executive, you find ways to learn something new and apply it to what you're doing. This forces employees to be alert, mindful and constantly improving.

Great leaders like Mahatma Gandhi, Nelson Mandela and Steve Jobs have a continuous appetite for learning and growth. They always listen and watch in the hope of learning new ideas and discovering new truths and realities.

Many of us do just the opposite. By staying in the same job for many years, although we become experts and our roles become easy, our learning flattens.

We don't like changing jobs as there is pain and struggle in taking on new roles. But the more we struggle, the more we learn.

When a new boss with new expectations takes over, we sometimes find ourselves struggling even though we have been in the same role for years. We try harder but still fail to impress. Why does this happen?

Much like the woodcutter, trying harder will not yield results. This is because we did not upgrade ourselves nor grow in the “easy” years. Our years of experience count for nothing as we did not keep up with the world around us and were ignorant and mindless of things that were evolving daily around us.

Two weeks ago, I interviewed Harvard Prof Ellen Langer, who reminded me of our natural inclination to be mindless. Mindlessness is our human tendency to operate on autopilot, whether by stereotyping, performing mechanically or simply not paying attention.

We are all victims of being mindless at times. By sharpening our axe, we move from a mindless state to a mindful state; from “blindly going with the flow” to thinking and “breaking boundaries.”

Why then do so many people fail to sharpen their axe? Well, axe sharpening isn't as fun as whacking away at the tree. And it is painful and tedious work.

Religious leader David O. McKay once said: “The greatest battles of life are fought out daily in the silent chambers of the soul.”

Sharpening the axe is a daily inner battle. Research reveals that self-educated presidents like George Washington and Abraham Lincoln sharpened their axe daily by cultivating the discipline of reading.

In a number of Asian organisations, when there is a crisis or financial situation, the first thing that gets slashed is training programmes for employees. Yet, in a crisis, there is a greater need for employees to have sharpened axes to deal with issues.

Crises often helps companies to become great because they finally take time to sharpen their axe by re-looking at their current strategies and reinventing their industries, sometimes through painful reforms.

Before the 1998 Asian financial crisis, the Korean auto industry were jaguh kampung and known for low-quality cars with strong domestic car sales.

The crisis forced them to take a step back, sharpen their axe, become mindful to the world and move to sell the majority of their cars outside South Korea.

Of course, too much or aimless axe sharpening can become another form of procrastination. Many like to attend training courses and classes but end up never using the axe. After sharpening the axe, use it or all is in vain.

How are your various blades doing? Your skills, your knowledge, your mind, your physical body, your relationships, your motivation, your commitment to succeed, your capacity for growth, your emotions - are all of them still sharp? If not, which ones are dull, and what can you do to sharpen them?

Lincoln once said: “Give me six hours to chop down a tree and I'll spend the first four sharpening my axe.” What are you doing to sharpen your axe? Take a step back this weekend and start sharpening your axe.

Daniel Wong's Note: One of my favourtite philosophy in life is: The more you learn, the more you earn. The current Europe's debt crisis provides the opportunity for value investors to buy fundamentally good stocks below their intrinsic value. Readers of the Bursa Winners ebook would have been "sharpening their axes" to "chop down more trees" ;)

StarBizWeek's EUGENE MAHALINGAM spoke to a few Maika shareholders to gauge their sentiments then and now.

■ Lured by the potential of good returns, like thousands of others, retiree JESWANT KAUR, 64, took a loan to buy 5,000 shares in Maika. She was then assistant examiner at the Inland Revenue Board. Why has she held on to the shares for so long when many others have given up hoping and sold theirs? “I just kept the shares as I was quite confident something good will happen. After all, it's the MIC's investment arm and MIC is part of the Government. You can't really lose much,” she says. On what are her thoughts on the latest offer on the table by Tan Sri G. Gnanalingam, she seems quite upbeat. “At least I get back my money. Some people may have lost their capital but I will get mine back. What's the alternative? None. So I'm quite happy with the solution,” she says.

■ For lorry driver BALA (not his real name), 47, the Maika Holdings saga is a painful but distant memory. His father, now deceased, had purchased the shares. “Back then, my father, an oil palm estate worker, had heard about this (Maika) and was quite taken with what was being offered. I remember they promised a lot of things and my father felt that it would be a good investment,” says Bala, who lives in Rawang. “It was a very long time ago. I think my father had forgotten about it.” Bala's father only ear ned RM180 a mont h. “Although he didn't have much money, my father still wanted to invest. I remember him complaining in the past that Maika had promised so much but there was little to show for it.” According to Bala, just weeks before the recent Hulu Selangor by-election, he had “several visitors” who came over to speak to him and other Maika investors, on what seemed like a fact-finding mission to ascertain how many members were still active. “I'm not sure who they were. I gave them a photocopy of the details of my father's investments. But since the by-election, we have not heard from them,” he says. Naturally, Bala's patience to see a resolution to this Maika issue has thinned out.

■ ARULDASS SANDASAMY's father, a Maika shareholder, passed away 20 years ago. The father was then an estate worker earning RM200 a month. He bought 500 shares. His mother was also an estate worke r and they raised eight children. “My parents used up their savings to invest in Maika shares as they believed then it would earn them decent returns,” he recalls. Aruldass also remembers that they had received a couple of cheques over the years, which was probably dividend payouts in the early years. “We received a cheque twice for about RM30 but that's about it. Of course, my father was very unhappy with the returns. After putting in RM500, what happened to the rest of the money? Back then, RM500 was a lot of money. It's disheartening that we don't even know where the money went to.” After waiting for years, they simply “gave up hoping.”

■ K. CHANDRAGOPAL, 60, a retired teacher, laughs mockingly when asked about his investment in Maika. “It's so long ago. It's easy to forget! In fact, I had forgotten all about it until I read about our “white knight” (Tan Sri G. Gnanalingam),” he says. Chandragopal bought RM300 worth of shares in Maika. “A few of us teachers had invested in it because we thought there was a future. Unfortunately, it was all hype and talk, no action. “I feel sad and cheated about the whole thing. They really did promise us a lot but in the end, we got nothing. It feels like we Indians are always on the losing end.”


Daniel Wong's Note: Can you identify what are the mistakes that these investors had made? Try going through their stories again and see if you can identify them. I shall reveal the answer to you next week ;)

By TAY HAN CHONG
(Source: http://biz.thestar.com.my/news/story.asp?file=/2010/5/15/business/6250980&sec=business)

LAST Sunday was Mother's Day. It also marked the end of my son's first week at playschool.

Although it was only a two-hour trial session, his mother was not allowed to remain in school.

It was probably a lot more emotional for my wife than for my son as she lingered outside the school gates, straining her ears and listening for the familiar cries or perhaps the occasional laughter.

It was another milestone in the journey of life for my young son, and a milestone for my wife and I as parents.

Special meaning

Mother's Day holds special meaning for us, as our son was born on this day two years ago.

After a “stressful” week for the three of us, perhaps this is what my son might say if he could articulate it himself (Of course, I am making the assumption that I can read his mind and his heart): “My mother is a source of inspiration. She sacrificed her career to be with me every step of my way. I am indeed privileged. My mother is my pillar of strength. I was so relieved when I saw her after my first day at school. I tried to be strong, but I was very scared too.

“My mother is a source of comfort. Her kisses will make all sorts of pain go away. I am always comforted by her magical touch.”

Many would remember an old Chinese children's song that glorifies a mother's love for her children. Translated in English, it goes something like this:

“In the world only mothers are good. Children with mothers are like precious treasure. When one is in the embrace of one's mother, it is a blessing without compare...”

As far as I can remember, there has not been a song written about fathers with the same level of importance as when compared to songs written about mothers. Perhaps, in the past, fathers were the breadwinners and mothers the caregivers.

However, over time, fathers are becoming more involved in the parenting process.

In fact, I know of someone (let's call him EJ) who took a break from his career to spend time with his children. Now that his children are grown up, he has gone back to work.

A well-known personality and an accomplished journalist, he shares the opportunity cost of being at home with his children.

But he says it is well worth it. He went through the experience of seeing his children grow up first-hand.

From a financial perspective, the sacrifice or opportunity made by the stay-home caregiver can be easily computed in dollars and cents.

It is a very simple computation - monthly salary plus benefits plus annual bonus multiplied by the number of years, factoring in inflation and potential increment. This cost can be significant.

Intangible cost

On top of that, sacrifices made in the form of lifestyle adjustments, which are almost always required when a family with children changes from dual income to single income, also have to be taken into account.

This intangible social/family cost is less easy to compute but can be easily appreciated by most families.

Some might think that being a full time stay-home parent equates a life of luxury. My wife would be the first to refute that.

She is not living the life of a “tai tai”. For stay-home parents, life is physically tiring, emotionally draining and financially straining. No pay, no days off and no medical leave.

But just like EJ, my wife knows that it is indeed a privilege to be a stay-home mother. One does not get to hear from the maid or the caretaker how one's child took his very first step, how he articulated his first word, or even how he fell off the bed. My wife experienced all these first-hand.

Hence, allow me to be a contrarian and turn this equation of economic and social costs upside down. Spending time with our children is not a cost, but an investment.

A cost or investment?

What is the difference between a cost and an investment? A cost is an expense and outlay, just like a teh tarik, which costs RM1.40, or a holiday costing RM2,000.

But an investment is like a RM20,000 master's degree programme, a RM100,000 unit trust investment or a RM1mil shophouse.

When we think of investments, we automatically think of the payback and returns.

EJ had invested in his children and my wife is still investing in our child. Not only does EJ not regret his choice, he proudly proclaims that his “payback and returns” are his emotional wealth and experiences that are unique to him alone.

No amount of money can replace or replicate something as intangible as that. In fact, he says that he would do the same all over again.

My wife echoes that sentiment, and I know many stay-home parents will agree too.

To them, Mother's Day and Father's Day are not just days for them to receive a rose, a box of chocolates or a special meal.

It is a day when one receives the annual statement of one's time-honoured and privileged investment made in the names of one's own children.

There is no perfect guide to parenthood; no “control-alternate-delete” function to reboot and restart. Parenthood is tough and sometimes mistakes are made.

However, by being there to guide and love our children, hopefully we can raise them up to be the better person we all hope to be.

“Investment” is not always about money, and I quote Joyce Maynard: “It's not only children who grow. Parents do too. As much as we watch to see what our children do with their lives, they are watching us to see what we do with ours. I can't tell my children to reach for the sun. All I can do is reach for it, myself.”

To all mothers, hope you had a happy Mother's Day. And as for fathers, our moment of recognition will come next month!

■ Tay is senior vice-president and senior head of UOB's personal financial services division.

Hello readers,

It's been quite some time since I last updated my blog. I was busy with the other part of my life..hehe..Initially I thought that I could update my blog at least once a week, but I guess I was too ambitious =P

As we're observing the debt crisis in Europe and how it affects the stocks in Bursa Malaysia, one fundamental question investors would ask themselves is: Should I hold or sell my stocks?

Answering this question would depend on the invidividual investors. If one needs to cash out the money from the stock market for some urgent/important purposes, then I think it's good to sell off one's stocks because the current bearish trend could last for months before the start of another strong bullish trend. On the other hand, if one doesn't need to use the money and has a medium to long term horizon for one's investment (5 years to 10 years), then the Europe's debt crisis should not bother you. In fact, this is a good opportunity for bargain hunting to increase one's holding of fundamentally strong stocks. Readers of Andrew Chia's Bursa Winners' ebook would have equipped themselves with the right knowledge and tools to shop for undervalued stocks =)

Having a medium to long term horizon for your investment, good money management and an investment strategy helps to keep you from making irrational buy/sell decision based on the emotion of fear and greed (fear that the current Europe's debt crisis will wipe out your investment capital and greed in chasing after overvalued stocks).